AM Best takes new look at the company following its acquisition by KnightBrook
AM Best has removed Excess Reinsurance Company from being under review with negative implications and affirmed its financial strength ratings (FSR) of A- (Excellent) and issuer credit ratings (ICR) of "a-".
The same applies to Excess Re’s wholly-owned subsidiary, Guilderland Re (New York), which was also bought by KnightBrook. The outlook assigned to all ratings is stable.
Concurrently, AM Best has withdrawn the FSR of A- (Excellent) and ICR of "a-" of Excess Re’s former parent company Excess Reinsurance Group as it has been effectively dismantled.
The previous reinsurance pooling arrangement between the companies is no longer in effect, and KnightBrook LLC will implement different strategies for the companies. As part of the acquisition, Northwestern Insurance Company, a Pennsylvania insurance company owned by one of KnightBrook, LLC's shareholders and not rated by AM Best, was merged with and into Excess Re and ceases to exist.
Excess Re, which is to be renamed KnightBrook Insurance Company, will be reactivated to write business emanating from various insurance programmes controlled by the shareholders of KnightBrook LLC.
Excess Re's ratings reflect its excellent current and prospective balance sheet strength and the conservative business plan being implemented by its new owner. Partially offsetting these positive rating factors are the challenges related to executing the business plan in a competitive environment and the company's relatively high stock investment leverage.
Management has indicated that Guilderland Re will remain in run off for the foreseeable future but continue to be fully supported, both financially and administratively. Its ratings recognise its excellent capitalisation, the stable run off of its remaining liabilities and its ultimate ownership by a group of shareholders with significant financial flexibility. Partially offsetting these positive rating factors is the uncertainty associated with the company's longevity as it winds down with minimal remaining liabilities.